London-based hedge fund Marwyn Investment Management said it wants to set up a distribution company spanning Europe and North America, kicking off with a $160 million deal to acquire Toronto-based DVD distribber Entertainment One.
Marwyn is looking to buy theatrical distribs in territories such as the U.K., Germany, France and Italy.
Managing partner James Corsellis said the fund expects to invest a further “couple of hundred million pounds” over the next two years to build an international business worth up to $1 billion.
“Marwyn sees a unique opportunity to create value in global entertainment distribution,” Corsellis said. “Entertainment One’s leading market positions and established relationships in North America represent a strong foundation on which to build a leading global entertainment content owner and distributor.”
The hedge fund failed last year in a bid to buy Motion Picture Distribution, a leading Canadian distrib that also owns Momentum in the U.K. and Aurum in Spain.
Marwyn, via a specially-created vehicle Earl Street Capital, has agreed to buy E1 for $161 million, including the assumption of $58 million in debt.
E1 is listed on the Toronto Stock Exchange, but if the deal goes through, it will be refloated in London on the Alternative Investment Market.
The company is Canada’s No. 1 wholesaler of DVDs, CDs and videogames, as well as a leading player in the U.S. market. It also has a content and rights business, licensing product for DVD distribution. It owns U.S.-based Koch Entertainment, one of the largest indie record companies in North America.
Marwyn will retain E1’s existing management, led by Darren Throop, to spearhead the expansion of the business, via acquisition of other companies, libraries or rights, focusing more on “filmed entertainment” than on music.
Corsellis said the company will not get into theatrical releasing in North America, but is very interested to do so in Europe.
Although the company’s core wholesaling business currently accounts for about 75% of its revenues, Corsellis predicts that the remaining percentage from rights exploitation will increase dramatically over the next two years.
Its bid for E1 has already been accepted by 48% of shareholders, and the takeover is expected to close by the end of March.